Some NYC restaurants are using cheap rents to expand during the pandemic

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The pandemic has been a bloodbath for most New York City restaurants, but some are expanding amid the carnage — and they can thank their hungry landlords.

Think discounts on rent and “percentage leases” based on revenue generated. Landlords are even giving out “free money” — writing checks for up to $1 million — so restaurateurs can renovate before moving in.

“There are deals happening that we would never have seen before COVID,” said Stratis Morfogen, founder of the Brooklyn Dumpling Shop, whose automated system of serving dinners through drawers in a wall has proven to be a good fit for the coronavirus era.

“All the biggest landlords in the world who would never have taken my calls are now calling me every day and trying to break down my door to do deals. It’s crazy. The landscape has shifted. Now tenants have the power. The take-it-or-leave-it mentality of landlords is long over,” said Morfogen.

He says he’s currently working on 11 new deals for “pennies on the dollar” and with “substantial tenant improvement” allowances.

“But,” he cautioned, “this window of opportunity for young entrepreneurs, especially ones with track records, is closing pretty fast.”

While Morfogen can’t talk about deals that are still being negotiated, he can reveal that a recent lease he signed for the Brooklyn Dumpling Shop in Hoboken, NJ, is like “30 cents on the dollar with substantial tenant improvement.”

James Beard award-winning chef JJ Johnson has meanwhile used the pandemic to expand his global rice concept, Fieldtrip. The flagship opened in Harlem in 2019. Last year, he added an outpost in Long Island City and this month opened a Rockefeller Center location. He now has his sights set on opening in Brooklyn and the Bronx.

“Landlords are realizing that restaurants are the backbone of communities. In the heart of [lockdown restaurant closings], they thought, it’s just a restaurant and a luxury and we’ll find something else,” Johnson said. “But they realized that the communities in the buildings and developments they built are asking, ‘Where are the restaurants?’ The restaurants keep away crime and keep people employed and the community safe.”


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